Academic journal article European Journal of Sustainable Development

Extractive Industry a Burden or an Opportunity for Sustainable Development?

Academic journal article European Journal of Sustainable Development

Extractive Industry a Burden or an Opportunity for Sustainable Development?

Article excerpt

1. Introduction

The fundamental principle of sustainable development is to serve the essential needs of the mankind at present while at the same time protecting and ensuring the needs of the future generations. Economic, environmental and social concerns constitute the three basic pillars of the sustainable development principles [WCED, 1987]. Raw materials are essential for the sustainable functioning of modern societies. Access to and affordability of mineral raw materials is crucial for the sound functioning of the world and European economy in particular. Sectors such as construction, chemicals, automotive, aerospace, machinery and equipment sectors which provide a total value added of euro 1 324 billion and employment for some 30 million people in Europe alone all depend on access and quality of raw materials. Securing reliable and undistorted access to raw materials is increasingly becoming an important factor for the EU's competitiveness and, hence, crucial to the success of the Lisbon Partnership for growth and jobs [EC, 2008a]. Although Europe has a high potential in reserves and exploration, the European mining has decreased over the last years due to the issues related to access to land, price of energy, employment costs and so on. In order to facilitate the sustainable supply of raw materials from European deposits, it is important to have the right legal and regulatory framework conditions in place [COM (2011) 25)]. Over 50% of major mineral reserves are located in countries with a per capita gross national income of $10 per day or less. This creates new opportunities for these resource-rich developing countries, particularly in Africa [EC, 2008b], to significantly increase their national income since many of them are still facing poverty or slow growth. However some of these countries are facing violent conflicts, sometimes fuelled by competition for control of natural resources and some lack governance, notably as regards the allocation of resource revenues. Furthermore, these countries have often difficulties negotiating with foreign mining companies due to asymmetric information about the value of deposits and insufficient administrative resources. Emerging countries are also pursuing strategies towards resource-rich countries with the apparent aim of securing privileged access to raw materials. For example, China and India have substantially increased their economic engagement with Africa in recent years; in the case of China this includes major infrastructure projects and active involvement in exploration and extraction activities in countries such as Zambia (copper), Democratic Republic of Congo (copper, cobalt), South Africa (iron ore), Zimbabwe (platinum) and Gabon, Equatorial Guinea and Cameroon (timber) [EC, 2008a].

Commodity markets have displayed increased volatility and unprecedented movements of prices in recent years. Prices in all major commodity markets, including energy, metals and minerals, agriculture and food, increased sharply in 2007 to reach a peak in 2008, declined strongly from the second half of 2008 due to the economical downturn and have been on an increasing trend again since the summer of 2009. To varying degrees, these price swings have been reflected in consumer prices, at times leading to social unrest and deprivation [COM (2011) 25)]. The commodity price fluctuations, in the period 2002 to 2008 were marked by a major demand for raw materials, driven by strong global economic growth, in particular in emerging countries such as China. This increase in demand will be reinforced by the further rapid industrialisation and urbanisation in countries such as China, India and Brazil. The high demand for raw materials and low extraction taking place in the developed countries, have increased the pressure on developing countries into increasing the exploration and exploitation potential in order to supply raw materials for the immediate needs for the developed countries. Asia (China, India, Iran,) Africa (Democratic Republic of Congo, South Africa), and Latin America (Chile, Venezuela, Colombia) are some of the main suppliers for the raw materials contributing to the immediate needs of developed countries. …

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